Arbitration and

Conciliation Act, 1996

Section 8
 What is arbitration
agreement ?
Section 7 of the Arbitration and Conciliation Act of 1996 defines arbitration agreement as an
agreement by the parties to refer to arbitration all or some disputes which have arisen or will
arise on a future date between them with reference to a defined legal relationship, whether
contractual or not. Ex- A doctor’s relationship with his patient or a lawyer’s with his client are
both examples of relations that are legal but not necessarily contractual.

An Arbitration agreement is made by any two parties entering into a contract by which any
disputes arising between them with regard to the contract agreement is to be resolved, without
going to the Courts and with the help of an Arbitrator. The agreement should mention who
should select the arbitrator, regarding what kind of dispute the Arbitrator should give decision,
the place of arbitration, etc.

The parties need to sign the Arbitration Agreement and the decision shall be binding on the
parties. This is to resolve any disputes with the help of an Arbitrator, without going to court,

Arbitration agreement is like a contingent contract, meaning thereby that these agreements come
into being or become enforceable contingent (subject to chance ) to the happening of a dispute
between the parties. It is only enforceable in case there arises a dispute between the parties.
 Benefits of Arbitration
Agreement in dispute resolution
It is faster and less expensive – As you do not have to pay for filing and court fees, you will save money
by choosing the arbitration option. It is also faster because you will be able to complete the entire process
quicker than if you were to try to go to court over the same matter.It is confidential

It is confidential - using arbitration means that you will not have to publicly testify. No matter what, the
details of the dispute will not be put on public record for anyone to find. Instead, they will be kept secret
in the confines of the arbitration room so you can make sure that no negative details are leaked.

You can choose your arbitrator -If you include this as part of your arbitration agreement, you can have
the ability to choose the arbitrator who will be determining the outcome of the dispute at hand. This can
be a very helpful component if you want to try to find someone who may have some specific experience
dealing with the type of dispute you have or someone who has a bit of experience in your field and can
better understand what is happening as a result. As an employer, you can refuse to hire someone who does
not sign the arbitration agreement

It can help you to avoid hostility – When a case goes to court, there is more of a likelihood that there
will be constant disputes and fighting on every single issue. This added hostility may never go away and
may even make it difficult for you to do business with others later on. However, arbitration is a much
more relaxed kind of environment, and while there is an existing conflict, it can be a lot easier to manage
without hostility because there is an arbitrator present. Both parties will have to cooperate with each other
in order to reach a mutual agreement. This can lead to less hostility and can help keep the reputation of
both parties intact.
 Content of Section 8
8. Power to refer parties to arbitration where there is an arbitration agreement.—

(1) A judicial authority, before which an action is brought in a matter which is the subject of an
arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or
under him, so applies not later than the date of submitting his first statement on the substance of the
dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer
the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the
original arbitration agreement or a duly certified copy thereof:

[Provided that where the original arbitration agreement or a certified copy thereof is not available with
the party applying for reference to arbitration under sub-section (1), and the said agreement or certified
copy is retained by the other party to that agreement, then, the party so applying shall file such
application along with a copy of the arbitration agreement and a petition praying the Court to call upon
the other party to produce the original arbitration agreement or its duly certified copy before that Court .]

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is
pending before the judicial authority, an arbitration may be commenced or continued and an arbitral
award made.
In the case P. Anand Gajapathi Raju & Ors vs P.V.G. Raju (Died ) & Ors on 28 March,
2000 the Supreme Court addressed two important issues regarding Section 8 -:

The conditions which are required to be satisfied under sub-sections (1) and (2) of
Section 8 before the Court can exercise its powers are : (1) there is an arbitration
agreement; (2) a party to the agreement brings an action in the Court against the other
party; (3) subject matter of the action is the same as the subject matter of the
arbitration agreement; (4) the other party moves the Court for referring the parties to
arbitration before it submits his first statement on the substance of the dispute.(creates
a right in the person bringing the action to have the dispute adjudicated by Court )

Whether the Court is in these circumstances obliged to refer the parties to arbitration :
The language of Section 8 is peremptory. It is, therefore, obligatory for the Court to
refer the parties to arbitration in terms of their arbitration agreement. Nothing remains
to be decided in the original action or the appeal arising therefrom. There is no
question of stay of the proceedings till the arbitration proceedings conclude and the
Award becomes final in terms of the provisions of the new Act.
 Analysis of Section 8

H. Srinivas Pai and Anr. v. H.V. Pai (D) thr. L.Rs. and Ors- Reference to arbitration and arbitability depends upon the existence of an
arbitration agreement, and not upon the question whether it is a civil dispute or commercial dispute. There can be arbitration
agreements in non-commercial civil disputes also.

Smt. Kalpana Kothari v. Smt. Sudha Yadav and ors- As long as the Arbitration clause exists, having recourse to Civil Court for
adjudication of disputes envisaged to be resolved through arbitral process or getting any orders of the nature from Civil Court for
appointment of Receiver or prohibitory orders without evincing any intention to have recourse to arbitration in terms of the agreement
may not arise.”

Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums- The Court in this case held that if the existence of the arbitration
clause is admitted, in view of the mandatory language of Section 8 of the Act, the courts ought to refer the dispute to arbitration. The
Supreme Court, while raising a presumption for the validity of an arbitration clause in an agreement.
 Conclusion

Section 8 is referred as saving beacon for arbitration and forms the

basis for forcing the parties in cases of domestic arbitrations to
adopt the model of arbitration where there exists an arbitration
agreement.
 References

https://viamediationcentre.org/readnews/Nzgx/SECTION-8-OF-ARBITRATION-AND-CONCILIATION-ACT-A
-SAVING-BEACON
https://www.mondaq.com/advicecentre/content/2786/Section-8-Of-The-Arbitration-And-Conciliation-Act-1
996-A-Saving-Beacon
https://www.legalserviceindia.com/legal/article-200-an-insight-into-2015-amendment-act-and-2018-amen
dment-bill-arbitration-and-conciliation-act-1996.html
https://singhania.in/blog/section-8-of-the-arbitration-and-conciliation-act-1996-a-
saving-beacon-